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Brakes Put On Property Price Growth
By admin | February 16, 2008
House price growth continued to slow over the course of last month, according to new figures.
Research carried out by Halifax indicated that during July, property prices increased by 0.7 per cent. Consequently, the month was said to be the fourth in a row in which the value of houses rose by less than one percentage point. With the average home now reported to cost £198,915, house prices have risen by just 1.3 per cent over the last three months. Overall, the financial services firm revealed that the typical house has increased by 11.2 per cent in worth during the last 12 months - the highest year-on-year rise recorded since February 2005.
Commenting on the figures, Martin Ellis, chief economist for Halifax, claimed: “We expect the downward trend in house price growth to continue as the five interest rate rises since last summer have an increasing impact on household spending and housing demand. Sound economic fundamentals, high levels of employment and a shortage in the number of available properties available for sale, particularly in London and the south-east, will, however continue to support house prices.”
Mr Ellis added that the financial services provider had revised its forecast of total house price growth for the duration of 2007 from six per cent down to four per cent. However, he pointed out that this was more due to the effects of stronger-than-expected increases over the first four months of the year rather than the slowing in growth seen recently.
Despite recent statistics indicating a curb in property price increases, he claimed that consumers could still see deepening pressure on their finances. “The increase in mortgage rates since last summer is having an effect on housing affordability and will bite further during the coming months. Negative real earnings growth so far this year and rising food prices will also reduce the income households have available for housing,” the economist stated.
Meanwhile, those consumers coming to the end of their fixed-rate mortgage deals are said to face an increase in homeowner loan repayments. For those who took out a two-year fixed product at 5.08 per cent in 2005, the financial services firm claimed that their monthly mortgage costs are to rise by £65 when their contract expires. However, the “overwhelming majority” were said to be able to absorb this increase in costs due to salary growth and rising house equity during the last two years.
Pointing to research from the Bank of England and the Royal Institution of Chartered Surveyors, Halifax indicated that prospective first-time buyers’ level of interest in purchasing a home decreased for the seventh consecutive month during June. Meanwhile, the proportion of mortgage approvals to fund the buying of property recorded in the second quarter of 2007 was said to be some eight per cent below the last four-month period of 2006.
Last month, a study carried out by Hometrack indicated that the average house price rose by 0.1 per cent during July - the lowest increase noted for a year-and-a-half. The third successive month which showed a slowing in growth, the firm revealed that the typical home now costs £176,300.
Tom Dawson writes for Essentially Home Loans Our visitors can apply online for secured personal loans and debt consolidation loans at the lowest interest rates.
Tags: growth, house, price, slows
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